As of March of 2023, there is now a HELOC alternative loan available. The alternative loan is a second mortgage reverse mortgage.
This loan can be an alternative for homeowners over the age of 55 who already have an existing low rate on their first mortgage, and don’t want to touch that loan, but need a chunk of money, flexible payment terms and liberal income qualifying for the loan.
As with all reverse mortgages, a monthly payment is not required to be made to pay back the loan. In exchange, the portion of monthly interest that accumulates on the balance of the loan, if not paid, gets tacked on to the balance of the loan and gets paid when the loan is either refinanced or the home is sold. This means the balance on the second mortgage reverse mortgage will rise over time. However, borrowers can choose to make monthly payments in any amount, as often as they want to mitigate the rising balance.
This mortgage loan is available to homeowner’s only in a handful of states, and the borrower must have an abundance of home equity. It’s also important to note that this loan is not in the family of FHA HECM loans, it is a private proprietary loan which is why the youngest borrower minimum age is 55 and not 62 like the FHA HECM reverse mortgages.
For more information, feel free to watch the below short video which goes into more detail on how this unique loan works or you can fill out the form below, or call or email me, I’m here to help!
Warm regards,
KW